The Air Force says it’s restructuring one of its major enterprise resource planning systems after spending several years building it and getting almost no new capability. The system is one of several that the Defense Department will need in place in order to prepare for a full financial audit by 2017.

All the military services and Defense agencies are relying on huge enterprise resource planning systems to meet the auditability milestones DoD leaders charged them with achieving in 2014 and 2017. DoD and the Government Accountability Office have concluded the ERPs are the only way to centralize and track the vast quantities of logistics, financial and pay and personnel data DoD has in a way that would satisfy outside auditors.

In the Air Force’s case, three big ERPs are under development, but the Enterprise Combat Support System has been the most troublesome, officials told lawmakers this week. The Air Force wanted to create a single, seamless system to track transportation, supply, maintenance, engineering and acquisition information.

Dr. Jamie Morin, the Air Force comptroller, said it hasn’t worked out that way.

“We’re now approaching seven years since funds were first expended on this system. The total cost is now over $ 1 billion. I’m personally appalled at the limited capabilities that program has produced relative to that amount of investment,” Morin told the Senate Armed Services Committee’s subcommittee on readiness and management support this week.

Air Force falls behind

Morin said the service was restructuring ECSS with the support of senior leadership. Morin promised to report back to lawmakers on the outcome in the next month or so.

The lackluster performance of ECSS is one reason the Air Force is behind the rest of the military services in the effort to prepare for both an auditable statement of budgetary resources by 2014 and a full financial audit by 2017. The service already has said it would have to rely on legacy systems and a lot of manual labor in order to meet that target &mdash and Morin assessed that the Air Force is at “moderate risk” for missing the deadline.

But it’s by no means the first instance of a failed ERP program in DoD. The most famous example might be the Defense Integrated Human Management Resources (DIHMRS). The Pentagon spent 12 years and approximately $1 billion building DIHMRS before giving up on the effort in 2010.

Sen. Claire McCaskill (D-Mo.) said plenty of other examples existed. The money wasted on failed ERP systems in DoD makes the recent GSA conference scandal look like lost change under the couch cushions, she said.

“If I add up all 11 of the ERP programs cumulatively, we’re $6 billion over budget and 31 years behind schedule. That’s a problem,” she said.

The Army has struggled with managing enterprise information as well. It’s already rolled out its ERP for financial information, the General Fund Enterprise Business System (GFEBS) to several locations, and the system has yielded positive audit results.

But the service still is struggling with pay and personnel information. GAO recently found the Army has no reliable way to even count the total number of soldiers on active duty at any one time. It’s a problem the Army doesn’t dispute. Col. Robert McVay told a recent FOSE conference that it’s not just a financial management problem, it’s an operational problem.

Too many HR systems required to get personnel data

Today, a brigade commander would have to tell his staff to look through at least three separate HR systems and manually aggregate data from various spreadsheets just to find out how many troops he was commanding, McVay said.

“We’d get a result that’s correct to about 3 percent, plus or minus,” he said. “That might be great for Gallup, but 3 percent of 100,000 soldiers is 3,500 soldiers. There’s no corps commander in his right mind that’s going to accept that. And by the way, Congress doesn’t like the fact that we can’t tell them how many soldiers we pay every year.”

McVay is the program manager of the Army ERP designed to solve that problem. Integrated Pay and Personnel System-Army (IPPS-A) is supposed to integrate the pay and personnel systems of the Active, Guard and Reserve components of the Army. The Army awarded a contract for the first increment of the system in February.

The Navy has decided not to continue pursuing a new ERP for pay and personnel. Instead, it will focus on improving the business processes around its existing systems. The Navy has already started deploying its primary ERP for most of the rest of the business functions an audit would require.

“Re-engineering and mapping our business processes across the Navy is the key,” said Robert Work, the Undersecretary of the Navy. “Our methodology requires base-lining and mapping business processes, allowing the business owners across the department to identify and prioritize their problems and then exploit their opportunities for improvement. A second key is data standardization and a third is having good internal controls. We’re focused on all three of these things, and auditable financial statements will be the outcome of all three of these efforts.”

Navy is close to auditability

The Navy Department is shooting to have its statement of budgetary resources auditable in 2013, a year before the current DoD deadline. The Marine Corps had hoped to have its statement in audit-ready condition by this year, but decided to refocus its efforts on 2013 after realizing that the 2012 books would have taken a few more months of work.

The ERP work the Navy’s department already has done has led to the shutdown of 1,400 of the systems and applications it used to use for financial management, Work said. The Army already has terminated 80 legacy systems, with 700 more still to come if all goes according to plan.

The Air Force initially had planned to cut off 240 legacy systems with its ECSS system, but with that program in limbo, the legacy systems are going to have to continue working, at least in the short term.

Keep the deadline in place

McCaskill wondered whether the cost of implementing the manual workarounds it will take to make those legacy systems work together over the short term is worth the cost.

Morin said even though some of the Air Force systems date back to the Vietnam War, they won’t have to deploy an army of auditors to get the audit results they need.

“In some cases, we’ll have to do manual reconciliations between those systems because they don’t interface, but it won’t take thousands of people to do it,” he said.

Robert Hale, the DoD comptroller, said even if it does cost more money to meet the short term 2014 audit goal with manual processes, relaxing the deadline would do more harm than good.

“I would argue strongly that we need the pressure that’s generated by the 2014 deadline,” he said. “It’s like turning an aircraft carrier. We’ve got to get this organization moving, and I think we’ve done it. If it drives us to some modest, manual workarounds, so be it. I think it will let us get to the ultimate 2017 end game sooner.

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